Which of the Following Is CORRECT About a CPA's Responsibility

question 37

Multiple Choice

Which of the following is CORRECT about a CPA's responsibility with regard totax return positions under Statements on Standards for Tax Services No. 1 (SSTS No. 1) ?

• A)A CPA may not base his or her position on authority that is not approved by the IRS under Section 6662 (accuracy-related penalty).
• B)A CPA may sign a return which has a tax position that has a realistic possibility of being sustained on the merits.
• C)A CPA may not sign a return which has any tax position that is not fully disclosed.
• D)All of these are correct.

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Definitions:

Simulation Analysis

A method used in risk management that uses statistical models to predict the outcome of a decision under conditions of uncertainty.

Degree Of Operating Leverage

A measure of how sensitive a company's operating income is to a change in its sales volume, indicating financial risk.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment by calculating the present value of all future cash flows minus the initial investment cost.

Simulation Analysis

is a method used in risk management to model possible outcomes of a decision by manipulating variables within mathematical or computer simulations.